Investing or trading in cryptocurrency of whatever kind is a risky affair. It does not matter whether you are investing in bitcoin, Ethereum, dogecoin or whichever-all of them come with their measure or risk. You have probably read stories of people who lost their hundreds of bitcoins in a single transaction which tells just how risky it is venturing in the crypto market.
Almost everybody who makes the bold decision to put their money into crypto investments or trading is pushed by the desire to get it big. Even with the risks lurching behind you, the appetite for making fortunes is very compelling.
On your way to getting that most envied crypto riches, it pays to really know the landmines. You do not want to be another case of Stefan Thomas who lost his private bitcoin wallet key and had to struggle finding a way to access his 7,002 bitcoins.
1. Lost crypto wallet keys
Your crypto wallet key is what qualifies you as the owner of the coins inside that account. It is your private keys that will be needed to approve a transaction to prevent unauthorized activity from taking place inside your account. What makes your private key a must protect is that it cannot be reset.
People are used to the normal accounts where there always a possibility to reset PIN if you can’t remember it. Should things go awry and you lose your private wallet keys, that spells doom to your crypto investments. So many people have been victims of losing their keys and it is never amusing.
2. Keeping all crypto investments in an online
Having all the bitcoin ownerships kept in one wallet is enticing and many people easily for it. The ease of access to such funds in just one account makes it more attractive but you will need to think twice. When the crypto wallet is kept online while loaded with coins, the risks of cyberattack and hacking kicks in.
To avoid this kind of risks associated with crypto loss, it is advisable that you consider either sharing your bitcoins across multiple wallets online, having a separate offline wallet or using both strategies. The cryptocurrency transaction takes place online; that is given but your coins should not be online for too long.
3. Mistakes when transferring the crypto assets
Cryptocurrencies are transferrable from one wallet to the next just like the normal bank transactions. However, instead of having a bank account in this case, you will use the recipient’s wallet address to send the funds. In case you mistakenly or just carelessly enter the wrong wallet address.
In the cryptocurrency blockchain, transactions cannot be reversed once they have been properly initiated. It means that the transaction will be completed even if you notice a mistake one second after you have already approved the transaction, you will not be able to do anything to save the situation. You may be lucky that the crypto miners try to return your money but in most cases, this isn’t working.
4. Failure to set up the stop-loss functions in crypto trading
Crypto exchanges allow the investors to set limits within which their transactions should run. In this plan, an investor deliberately sets the digital system of crypto trading so to avoid losing money. So, the metrices will alert you to trade quickly to avoid a loss.
Trading in crypto currency by its nature exploits volatility in the market. The demand and supply of cryptocurrency changes every other minute which is why investors keep monitoring market performance on graphs all the time. Sometimes, the market can experience a consistent downturn which means investors’ cryptocurrency investments loss value. The stop loss function in crypto trading will monitor through algorithms to alert you when its critical to trade and avoid losses.
Aside from helping you avoid dire losses on your crypto investments, the stop loss order also allows the investor to know when the market is high enough to signal high returns. So the function of stop loss is to keep the value of your investments within a given range of market condition-we may call this a safe trading space.